"Other Revenue": The Black Hole of Political Party Financial Reporting

There is, it seems, at least one unexpected benefit to the revelations regarding the NDP's sheepish about-face on those now infamous advertising fees that it quietly refunded to unions and other buyers earlier this year.

Thanks to that internal NDP document posted online by the Toronto Star as part of its initial report, we now know the source of at least some of the otherwise unexplained
"other revenue" that the party reported in its annual financial statements for
2006 and 2009. (They still haven't submitted last year's return after requesting an extension to the original deadline last May.)

But
aside from that unprecedented, if not exactly voluntary, peek into the NDP coffers,
not even Elections Canada is privy to the details of the hundreds of
thousands -- in some cases, millions -- of dollars that political
parties take in every year, over and above the income gleaned from
donations, membership sales, election expense rebates and per-vote
subsidy transfers from the government.

Since the ban on corporate and union donations came into effect in 2005, the five major federal parties have reported over $10 million in otherwise unspecified "other revenue":

Conservative Party: $5,838,758.00

New Democratic Party: $2,198,624.00

Liberals: $1,442,275.00

Bloc Quebecois: $785,820.00

Green Party: $219,710.00

The full breakdown, by party and year, as listed in their annual financial statements:

It's worth noting that the NDP's formerly thriving sideline selling ad space at party conventions only
came to light -- and, more crucially, to the attention of Elections
Canada -- after an anonymous conventioneer spotted -- and took
pictures of -- the signs in question, thus collecting the necessary
evidence that ultimately found its way into the formal letter of complaint filed by Conservative MP Dean Del Mastro.

Had
that particular bit of "other revenue" not been so, well, visible, it's unlikely that it ever would have been identified as a
potential violation of the ban on union donations.

After all,
it's not like the NDP made any effort to hide it -- those ad revenues were dutifully reported in the annual reports for the years in question, with
nary a red flag being raised over its potentially problematic
provenance. It wasn't until Del Mastro complained to Elections Canada that the agency started asking questions -- and since the party has refunded the money, we'll never know if it would ultimately have been found the NDP in breach of the law.

(For
its part, the NDP has pointed to a 2003 letter from Elections Canada
that explicitly states parties can, in fact, sell advertising, provided
that it does so according to fair market value. It also reportedly had experts ready to testify that this was the case with the convention ad fees, but eventually decided to cut its losses, refund the money and call it a day.)

Under the
current law, political parties aren't required to provide any
information beyond brief line item notes.

More crucially, at least from
an enforcement perspective, although the statements do have to be
audited, and must be prepared in accordance with generally accepted
accounting principles, the Chief Electoral Officer can't even ask to see the receipts to back up those claims.

(That could change if the government lives up to its pledge
to bring in legislation that would give the CEO the power to "request
all necessary documents from parties to ensure compliance with the Elections Act,"
but it's worth noting that a similar proposal put forward by the CEO
last year was rejected by the Conservative-controlled committee charged
with studying his recommendations.)

So, other the fact that at
least one party was able to make a little extra cash selling ad space at
conventions -- which, by the way, is not, in itself, against the law,
provided that such transactions are consistent with fair market value --
what do we know about those "other revenue" streams?

Not much,
as it turns out. As noted above, political parties are allowed to engage
in commercial transactions, which could include anything from renting
out office space to playing the market.

They could invest in
businesses, short stocks, dabble in real estate or finance an
off-Broadway show -- in theory, that is. In practice -- well, see above.
Unless the party itself imposes restrictions on how the money is to be
handled, they're pretty much free to manage their finances however they
wish.

"Well, why shouldn't they?" I can hear those of you who have made it this far into this essay ask -- and just to be clear, I'm not necessarily suggesting that they should not. What I do think should be required, however, is that any and all outside interests should be disclosed, on a regular basis, much as MPs, ministers and other public office holders are obliged to disclose certain holdings, investments, assets and liabilities.

After all, most MPs are not only party members, but are uniquely dependent on the continuing fiscal solvency of those parties in order to secure future electoral success. Given all that, wouldn't it be a good idea to know whether a party could have a financial interest in a matter that could come before the House?

In any case, unless the law is changed to tighten up the
requirements for annual reporting, or the parties voluntarily share the
details of their pecuniary interests -- which recent experience would
suggest they're not terribly keen to do -- the sources of all that "other revenue" will continue to be kept secret.

Stay Connected with CBC News

About the Author

Kady O'Malley has been covering the Hill for more than a decade (yes, really) for a variety of publications. An Ottawa girl (not quite born, but raised), she has a passion for politics that borders on the unhealthy, and has liveblogged her way through hundreds of committee meetings, press conferences, judicial inquiries, budget launches, cabinet shuffles, and even the odd constitutional crisis. Oh, and yes, her Boston Terrier really is named "BlackBerry."
For up-to-the-minute bulletins, follow Kady on twitter!